Articles Discussing Human Resource Issues In California.

The California Supreme Court, in Dynamex Operations v. Superior Court, held that for purposes of claims under the California Wage Orders “engage, suffer or permit to work” determines employee status, thus requiring a defendant who disputes that a worker is an employee (rather than an independent contractor) to prove (A) the worker is free from control and direction of the hirer in connection with performing the work, both under contract and in fact; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hirer.

In a groundbreaking new decision, the California Supreme Court announced a significant change in independent contractor law, adopting a modified “ABC” test for determining whether an individual is an employee under the Wage Orders.1 This new independent contractor test is modeled on Massachusetts’ independent contractor statute, which has been considered the strictest in the country.

In Saheli v. White Memorial Medical Center (B283217, Cal. Ct. App., March 14, 2018), the Court of Appeal for the Second Appellate District addressed for the first time whether restrictions on arbitration agreements contained in the Ralph Act and Bane Act are preempted under the Federal Arbitration Act (“FAA”).

California’s Fair Employment and Housing Council (“FEHC”) has proposed new regulations (revised regulations, really) addressing the state’s new ban-the-box and parental leave laws. The regulations are not yet final or in effect, but are being considered by the FEHC and likely will be adopted, potentially with some modifications based on input from public comments and public hearings in the near future, with the first hearing scheduled for April 4, 2018.

In a loss for the California transportation industry, the Court of Appeal for California’s Fourth Judicial District recently found in Muro v. Cornerstone Staffing Solutions, Inc., that the Federal Arbitration Act (“FAA”) is unenforceable in employment contracts regarding employees who are engaged in transporting goods in interstate or foreign commerce, regardless of whether the employer itself is in the transportation industry.

Among the many questions California employers face when navigating the ins and outs of various disability leave laws is under what circumstances an employee may choose or be required to utilize paid time off for an otherwise unpaid leave of absence. When dealing with these issues, it is important to consider some nuanced differences between various federal and California state laws. The following are some guidelines for employers to keep in mind:

The Department of Fair Employment and Housing (“DFEH”) finalized new regulations limiting the ability of employers to consider criminal history when making employment decisions.

The validity of mandatory arbitration agreements continues to be a major focus of litigation and legislation. As employers know, the U.S. Supreme Court currently is reviewing the issue of whether class action waivers violate the NLRA in the consolidated matters Morris v. Ernst & Young, Lewis v. Epic Systems, and Murphy v. NLRB. Briefing is underway in those matters and oral argument is expected this fall.

When it comes to legislation restricting employer use of criminal records, California seems to be leading the charge. In the last six months alone, we have reported on a variety of new laws that apply to California employers that use criminal records in pre-hire and other employment decisions.1 Continuing this trend, on February 16, 2017, five California assembly members introduced Assembly Bill 1008, which proposes to add a section to the Fair Employment and Housing Act (FEHA) containing new state-wide restrictions on an employer’s ability to make pre-hire and other employment decisions based on an applicant or employee’s criminal records, including a “ban-the-box” component.

In another important decision regarding an employer’s obligation to provide rest breaks, the California Supreme Court in Jennifer Augustus et al. v. ABM Security Services, Inc. (2016) 2 Cal.5th 257, dealt with two issues related to employee rest breaks: 1) whether employers are required to permit their employees to take off-duty rest periods pursuant to Labor Code 226.7 and Wage Order 4; and 2) whether employers may require their employees to remain “on call” during rest periods.

On Friday, the Ninth Circuit Court of Appeals issued its opinion in Syed v. M-I, LLC, holding, on an issue of first impression, that an employer willfully violated the Fair Credit Reporting Act (“FCRA”) by including a liability waiver on the background check disclosure and consent form it provided to prospective employees. The Ninth Circuit held that the FCRA expressly states that before obtaining a consumer report for employment purposes, an employer must disclose its intent to secure a consumer report for employment purposes and inform the consumer of his/her rights under the FCRA. The FCRA states that this information must be provided in writing in a document “consisting solely of the disclosure.” The FCRA goes on to state that the employer must obtain the consumer’s authorization to procure the report and that the authorization can be on the same document as the disclosure. In this case, the employer had a disclosure and consent form, as required by the FCRA. However, the employer’s form included a provision stating that the applicant signing the form agrees to release the employer from any and all liability stemming from its reliance on information derived from the consumer report. The Ninth Circuit held that the inclusion of this liability waiver on the disclosure and consent form violated the FCRA’s express mandate that the disclosure consist “solely of the disclosure.” The Ninth Circuit reasoned that the inclusion of extraneous information, such as a liability waiver, in the disclosure form violates the law.

Worse, the Ninth Circuit held, as a matter of law, that the employer’s violation was both “objectively unreasonable” and “willful” (thereby exposing the employer to statutory and punitive damages), even though this was an issue of first impression that no Circuit Court had before decided.

The full text of the Ninth Circuit’s opinion is available here. This case will only serve to promote more FCRA lawsuits against employers. Employers may wish to review their background check disclosure and consent forms to ensure that they do not improperly include “extraneous” information and that they otherwise comply with the FCRA (and California law, as applicable).

Executive Summary: The City of Los Angeles recently enacted its own Ban-the-Box law, designed to prevent employers with at least 10 employees from inquiring into or requiring an applicant to disclose their criminal history until a conditional offer of employment has been made. The law is expected to go into effect on January 22, 2017.

In the next week, Los Angeles Mayor Eric Garcetti is expected to sign the Fair Chance Initiative for Hiring (Initiative), which will prohibit most private sector employers from inquiring into a job applicant’s criminal history until after making a conditional offer of employment. Los Angeles’ new “ban-the-box” law follows on the heels of similar legislation enacted in New York City and Austin, Texas, and continues the nationwide ban-the-box trend.1 The Initiative will go into effect in less than one month, on January 1, 2017.

With recreational marijuana now legal in California, many employers are wondering how this impacts their drug free workplace policies and their response to an applicant/employee drug test that is positive for marijuana. Contrary to what many employees likely will believe, the new law does not restrict employers’ rights to continue enforcing policies that prohibit marijuana use. The new law expressly states that that it should not be construed or interpreted to:

On September 7, 2016, the California Department of Fair Employment and Housing (“DFEH”) announced modifications to its proposed regulations originally promulgated on February 19, 2016, governing the use of criminal history in employment decisions. The new regulations are intended to prevent disparate impact discrimination against protected classes such as gender, race, and national origin. If passed, the new modified regulations will impose more restrictions on employers, including a burden shifting test.